Wednesday, May 5, 2010

Alcatel-Lucent Posts Revenue of EUR 3.247 billion, Sees Recovery in Some Markets

Alcatel-Lucent reported Q1 2010 revenues of Euro 3.247 billion, down 9.8% year-over-year and 8.2% at constant currency. There was an adjusted gross profit of Euro 1.058 billion or 32.6% of revenues, compared to 31.5% in the year ago quarter and 36.7% in the fourth quarter 2009. First quarter adjusted operating income came in at Euro (195) million or (6.0)% of revenue.

"We are witnessing a recovery in the telecommunications equipment and related services market in some geographical areas especially North America. This recovery is driven by key technologies such as IP, terrestrial optics and WCDMA/LTE. With a solid position in all of these areas, Alcatel-Lucent is experiencing a strong increase in demand.

"However, we were not able to fully satisfy customer demand for our products due to tightening components availability. This resulted in a weak financial performance this quarter, which does not reflect the overall underlying momentum within the company," stated Ben Verwaayen, CEO.

Some highlights cited by the company:

By operating segments, Networks saw a double-digit decline in revenue, partly attributable to a shortage of components in our supply chain. This has been particularly true in wireless access and terrestrial optics.

Applications revenue declined 6.3% year-over-year with enterprise solutions & Genesys almost stable (slightly growing at constant currency).

Services segment was more resilient with a 3.1% year-over-year decrease thanks to managed services and multivendor maintenance.

From a geographic standpoint and at constant currency, year-over-year revenue grew at a single-digit rate in North America (+6%), declined at a single-digit rate in Europe (-9%) and at a double-digit rate in Asia Pacific (-19%) and in the rest of the world (-23%).

For the first quarter 2010, revenues for the Networks segment were Euro 1.928 billion, a decrease of 13.1% compared to Euro 2.219 billion in the year-ago quarter and a decrease of 14.0% compared to Euro 2.242 billion in the fourth quarter 2009. At constant currency exchange rates, Networks revenues decreased 12.0% year-over-year and 17.7% sequentially.

Revenues for the IP division were Euro 272 million, a decrease of 5.6% from the year ago quarter, driven by the decline in MSWAN revenues due to continuing market contraction.

IP/MPLS service routers revenues grew at a double digit rate from the year ago quarter thanks to strong momentum in North America & EMEA and good traction in IP/MPLS mobile backhaul with new wins announced with Verizon Wireless, Pannon and MTS Ukraine.

Revenues for the Optics division were Euro 567 million, a decrease of 13.7% from the year ago quarter. Terrestrial optics declined at a high teens rate. After a strong sequential growth and limited year-over-year decline in Q4 2009, the WDM segment confirmed its recovery this quarter with strong year-over-year growth driven by the Americas and APAC.

Revenues for the Wireless division were Euro 819 million, a decrease of 10.5% from the year ago quarter. The WCDMA segment witnessed a strong growth year-over-year and sequentially driven primarily by the North American market, and the 3G CDMA (EVDO) segment experienced a sustained demand due to data traffic growth driven by the increased market penetration of smart-phones. This was offset by a decline in GSM & 2G CDMA revenues, in line with their corresponding market dynamics.

Revenues for the Wireline division were Euro 298 million, a decrease of 24.2% from the year ago quarter. Legacy ADSL access and core switching drove the decline. Demand for VDSL2 technology remained solid while GPON continues to grow footprint with a recent win for ZON, a cable provider in Portugal.

Revenues for the Applications segment were Euro 416 million, a decrease of 6.3% compared to Euro 444 million in the year-ago quarter and a sequential decrease of 22.2% compared to Euro 535 million in the fourth quarter 2009.

Revenues for the Services segment were Euro 772 million, a decrease of 3.1% compared to Euro 797 million in the year-ago quarter and a decrease of 25.0% compared to Euro 1 030 million in the fourth quarter 2009.

For 2010, Alcatel-Lucent continues to expect nominal growth (defined as between 0% and 5%) for the telecommunications equipment and related services market. The company aims to reach an adjusted operating margin in the low to mid single-digit (defined as between 1% and 5%).

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